What Recession?

[Disneylvr]

After this trip we won't be going back for 2-3 years at least. My DH works in banking and that is a scary place to be right now. If we didn't need a break so badly we wouldn't be going this year either. In my area too many large companies are laying off right now. Chrysler, Citibank.....

 

[MrsPete]

People have just gotten too used it living this way.....and they'll only give it up when the banks pry those credit cards from their spending fingers

I just can't see us making the transition back to savers from spenders in this country. Even though this is what we desperately need to do.

I think you're exactly right.

 

[RayJay]

I am not surprised that your area is not yet affected by a reduction in spending.

Why? I'm interested in your opinion.

Thanks
RayJay

 

[Plantlady]

DH and I both work in the education industry. Our jobs aren't going anywhere. It's the first time I've had a full time job outside of the house in YEARS (stay at home mom)..

So, we currently have a two income household.. we're doing great.

Although, DH's etsy shop is not doing so well.. people aren't quite as happy to buy art, I guess.

 

[leahjade]

I think a lot of it is media hype due to the upcoming elections! It's sure not bad here in PA either. We waited in line an hour to eat Saturday at 4 p.m.! And the mall was packed and people had lots of shopping bags, too, not just window shopping. My husband is a manager and can't get enough people to work for him (and it's a good paying company, too). And when I called for ADR's at Disney for our trip in July - I had to rearrange my schedule several times because everything was full, and I doubt all the people calling for reservations were international travelers. We're planning a trip to Universal as well as WDW and the Hard Rock was totally booked for our weekend 9 months before our travel date. So that's not a trip that someone had already planned awhile back. I just try not to believe the "doom and gloom" media all the time.

 

[madge]

And your right, food prices are getting ridiculous. I never use to notice, guys don't really notice that stuff, but whoaa lately I've noticed.

Later
RayJay

I just read this article about food prices on the DrudgeReport:

http://www.boston.com/business/pers...08/03/09/surging_costs_of_groceries_hit_home/

And the headline on the DrudgeReport? Oil is $107/barrel.

 

[DVC Sadie]

Why? I'm interested in your opinion.

Thanks
RayJay

Virginia, Maryland and the DC metro areas have one of the highest income levels and a lot of the people living in those areas (and other areas across the US) will still spend a lot of money on high end goods.

What I have noticed is the people who are getting squeezed and are not shopping are the ones who earn a median or average income. JMPOV.

 

[eliza61]

Virginia, Maryland and the DC metro areas have one of the highest income levels and a lot of the people living in those areas (and other areas across the US) will still spend a lot of money on high end goods.

What I have noticed is the people who are getting squeezed and are not shopping are the ones who earn a median or average income. JMPOV.

I think it evens out though, because the East coast also has some of the highest cost of living. Housing and car insurance in the DC-Baltimore area is absolutely ridiculous.

 

[punkin]

Virginia, Maryland and the DC metro areas have one of the highest income levels and a lot of the people living in those areas (and other areas across the US) will still spend a lot of money on high end goods.

What I have noticed is the people who are getting squeezed and are not shopping are the ones who earn a median or average income. JMPOV.

I live in the DC area and my HHI is above average for the area and I am still getting squeezed. I have been feeling squeezed for two years now.

 

[Aisling]

I don't know if the country is technically in a recession, but I know where I feel the changes. My natural gas price, car insurance, gasoline, cell phone taxes, and insurance premiums have all gone up in the last year, and that's where I feel it the most. Yes, everything gets more expensive over time, but my husband's salary hasn't gone up. Is that what a recession means, when prices go up but salaties basically stay the same?

Except for a few items like milk and cereals, food has stayed the same. Clothes, too. Toys have outrageously gone up, but it doesn't affect me, as I have older kids, but the electronic game prices are obscene. Vacations have gone up, only because of travel expenses (gas, airfare). Also, credit card finance charges/interest rates have gone up. And housing. I bought my small house in 1995 for $175,000, and it's now valued at almost $500,000, which is ridiculous. But people are still buying. I don't know how they do it.

I do know that a lot of people are deeply in debt, but aren't talking about it. My neighbor, who just bought his house last year, was at the bank begging for some way to have a lower mortgage. (I know this because of a blabber mouth who works at the bank.) But this man has recently purchased a big plasma screen TV and a houseload of new furniture. Not putting him down at all for doing it, but I wonder how he's able to do it when he's having trouble paying his mortgage.

I'm in the process of getting out of credit card debt, and when I accomplish that, I still worry about increasing prices, even though DH has a good salary. For people with no or poor health insurance, OMG I feel for them. We had no health insurance when my oldest was born, and it was $2000 medical bill, which was fine. Thank God we were covered for my second, when I had a c-section with complications with my second and spent a wek in the hospital, to the tune of $30,000. We'd still be paying for it years later.

I don't know what the solution is, but at least if fuel and gasoline prices come down, it would be a tremendous help.

So in my mind, there's something going on, a recession or something, and even though people are still crowding the stores, take note of how many are using credit cards. That doesn't mean they don't have the cash to pay it off, but if they're average folks like me, I don't know how they're able to do it.

 

[RayJay]

Virginia, Maryland and the DC metro areas have one of the highest income levels and a lot of the people living in those areas (and other areas across the US) will still spend a lot of money on high end goods.

What I have noticed is the people who are getting squeezed and are not shopping are the ones who earn a median or average income. JMPOV.

Yes, I can agree to degree that median to avg income feels the pinch quicker, the middle to upper incomes are feeling it to.

Again, my initial post was the surprise that Disney was sold out for Easter week, everyone there can't be upper incomes, it's mostly families on school vacations that week.

I believe what DVCGirl posted, people are still using them cards, we might have a bigger bubble on our hands besides housing.

Thanks for your Opinion
RayJay

 

[RayJay]

I don't know if the country is technically in a recession, but I know where I feel the changes. My natural gas price, car insurance, gasoline, cell phone taxes, and insurance premiums have all gone up in the last year, and that's where I feel it the most. Yes, everything gets more expensive over time, but my husband's salary hasn't gone up. Is that what a recession means, when prices go up but salaties basically stay the same?

Except for a few items like milk and cereals, food has stayed the same. Clothes, too. Toys have outrageously gone up, but it doesn't affect me, as I have older kids, but the electronic game prices are obscene. Vacations have gone up, only because of travel expenses (gas, airfare). Also, credit card finance charges/interest rates have gone up. And housing. I bought my small house in 1995 for $175,000, and it's now valued at almost $500,000, which is ridiculous. But people are still buying. I don't know how they do it.

I do know that a lot of people are deeply in debt, but aren't talking about it. My neighbor, who just bought his house last year, was at the bank begging for some way to have a lower mortgage. (I know this because of a blabber mouth who works at the bank.) But this man has recently purchased a big plasma screen TV and a houseload of new furniture. Not putting him down at all for doing it, but I wonder how he's able to do it when he's having trouble paying his mortgage.

I'm in the process of getting out of credit card debt, and when I accomplish that, I still worry about increasing prices, even though DH has a good salary. For people with no or poor health insurance, OMG I feel for them. We had no health insurance when my oldest was born, and it was $2000 medical bill, which was fine. Thank God we were covered for my second, when I had a c-section with complications with my second and spent a wek in the hospital, to the tune of $30,000. We'd still be paying for it years later.

I don't know what the solution is, but at least if fuel and gasoline prices come down, it would be a tremendous help.

So in my mind, there's something going on, a recession or something, and even though people are still crowding the stores, take note of how many are using credit cards. That doesn't mean they don't have the cash to pay it off, but if they're average folks like me, I don't know how they're able to do it.

Perfectly said, I'm ready to cry Uncle!!!!

RayJay

 

[branv]

My husband is a Banker (Credit Officer for his bank) and he says we have only just begun to see the affects of a recession. When people run all their cc debt up and cannot robe peter to pay paul anymore you will see things get much worse.

I agree -- I think that we have just really gotten started with this thing. Right now it's only hitting people on the front lines -- those in immediately depressed areas or industries, those who seriously overextended or experienced some personal setbacks (illness, job loss, etc). I think by the end of the year we're going to see some nasty nasty trickle down, and sadly a lot more layoffs. In my area we're still going strong, but DH's company (technology) has already announced no annual raises and my mother just found out her department (acct'ing department for major retail chain) is being moved overseas (she's worked there 20 years and is just shy of retirement age). I'm already starting to hear more upper-middle class friends talking about making budgets and worrying about credit card debt...things they've NEVER been interested in before. I think it's the tip of the iceberg.

 

[mello]

Our two trips for this year are paid for. But we are now planning not to go anywhere at all next year. We had planned on 2 trips next year also, but we'll be saving that money instead.

 

[mickeyfan2]

Our two trips for this year are paid for. But we are now planning not to go anywhere at all next year. We had planned on 2 trips next year also, but we'll be saving that money instead.

Why not cancel one of your vacations this year and take it next year?

 

[petrymom]

...I will be there for Easter week...this is not a time I would normally go to Disney, but the trip is free so I cannot complain too much!!

We are going then too...

March 14th through the 21st. This is mostly likely a last hurrah for us. Have gone a couple of times in the past years and I hopefully will be starting a new job this year that may make it harder to go.

We probably shouldn't be going either d/t the economy but you only live once.

 

[ProudMommyof2]

WE have not changed any plans but we have yet to tell the kids of our 11/08 trip. That way if there are any problems we can cancel without disappointing them. (it would take something catastrophic to get me to cancel the Poly!!!)

 

[dvcgirl]

I agree -- I think that we have just really gotten started with this thing. Right now it's only hitting people on the front lines -- those in immediately depressed areas or industries, those who seriously overextended or experienced some personal setbacks (illness, job loss, etc). I think by the end of the year we're going to see some nasty nasty trickle down, and sadly a lot more layoffs. In my area we're still going strong, but DH's company (technology) has already announced no annual raises and my mother just found out her department (acct'ing department for major retail chain) is being moved overseas (she's worked there 20 years and is just shy of retirement age). I'm already starting to hear more upper-middle class friends talking about making budgets and worrying about credit card debt...things they've NEVER been interested in before. I think it's the tip of the iceberg.

This is exactly right....we're just getting started here. And the more I read, the worse I see things getting. Again, it all comes back to housing. And housing won't stop it's decline until the banks start lending again. Demand for housing will return only when demand for mortgage backed securities returns....and until that happens, rates are going to continue to stay high, regardless of how far the Fed slashed rates.

In another thread a poster reports that they were quoted 7.5% for an FHA mortgage, another sounded like a broker and said that the best they could get their client was 6.875%.

Here's a blurb on this from the Boston Herald

"With the U.S. economy on the brink of recession, mortgage rates should be plunging back toward 2003’s record lows - but aren’t.

Rates have shot up in recent days to about 3 percentage points above 10-year U.S. Treasury bond yields - a full percentage point above normal and the highest “spread” in 22 years.

“The Fed keeps lowering the Fed Funds rate, but mortgage rates haven’t dropped,” said mortgage broker/lender John Battaglia of Cambridge Mortgage Group.


Battaglia and other experts blame the subprime-mortgage meltdown, which continues to scare away large investors who typically buy up home loans. Fewer players means those investors that do remain can demand higher interest rates."

And so with the Fed cutting as fast as they can to save the banking system, the credit markets (this includes mortgages) in a shambles and housing continuing to fall....things are unfortunately going to get much worse in the short term.

My advice would be to start setting aside an extra 3-5% of your paycheck for food and energy costs because we're going to see prices go much higher. Oil is trading just under $110 a barrel this morning.

Again, I expect that the government will step in very soon with some plan to prop up the housing market.....either by buying distressed mortgages or freezing foreclosures....something.

 

[punkin]

In another thread a poster reports that they were quoted 7.5% for an FHA

*******

Again, I expect that the government will step in very soon with some plan to prop up the housing market.....either by buying distressed mortgages or freezing foreclosures....something.

The market has apparently already priced in another .75% drop and the mortgage rates are completely disconnected from the fed funds rate. Banks are just NOT lending. This will be a further drag on the housing market.

I have posted before that I am against a bailout, but the way things are looking now, I think a bailout is all but inevitable to stave off a real economic crisis.

 

[dvcgirl]

The market has apparently already priced in another .75% drop and the mortgage rates are completely disconnected from the fed funds rate. Banks are just NOT lending. This will be a further drag on the housing market.

I have posted before that I am against a bailout, but the way things are looking now, I think a bailout is all but inevitable to stave off a real economic crisis.

You're right....they have 75 bps in 100% in the fed funds futures. If they don't get that the market will react in a big way.

I think we're in a serious crisis now, and so we're going to see some kind of massive bail-out. Federal deficits be damned, they're going to do it. They have no choice.

I was reading a housing blog where brokers weigh in and are saying things like....ultimately, when the fed turns around and starts to chase inflation (which will be ugly), and begins raising rates....we could see double digit mortgage rates again. Wouldn't surprise me in the least.